Price matching not allowed: TCP to issue multiple tenders for urea import

Trading Corporation of Pakistan (TCP) is compelled to issue multiple tenders for the import of 300,000 tons of urea as the federal government has not allowed price matching. Sources told Business Recorder on Tuesday that the state-run grain trader is going to issue third gallop tender today, Wednesday for the import of urea as in the previous two tenders not a single bidder/supplier was agreed to supply complete quantity of the tender and some 150,000 tons urea was procured through two tenders against the targeted quantity of 300,000 tons. In the previous two urea import tenders, most of bidders offered to supply 75,000 tons to 100,000 tons. 

The Economic Co-ordination Committee (ECC) of the Cabinet, in its meeting dated July 2, 2013, allowed import of 0.3 million tons urea to avoid any shortage in the domestic market. Following the decision of the ECC, the Ministry of Commerce asked TCP for the import of some 0.3 million tons of the commodity from international market on an urgent basis as the domestic market may face some shortage in upcoming months due to slow urea production by local fertiliser producers owing to gas curtailment. 

In pursuance of the ministry’s directives, the state-run grain trader issued first international gallop tender on July 10, 2013 and invited bids from international suppliers for the import of urea. In order to avoid any speculation, TCP invited bids only from pre-qualified foreign suppliers/exporters, already registered with the corporation, for supply of urea in bulk through world-wide sources on Cost and Freight (C&F) basis and bidders have been asked to submit bids for a minimum quantity of 75,000 tons and maximum 300,000 tons. 

However, in response to the first urea import tender, opened on July 22, 2013, not a single bid was for complete quantity of the tender and most of bids were for a quantity of 75,000 tons to 125,000 tons. Even, lowest bidder namely M/s Swiss Singapore also submitted bid for a quantity of 75,000 tons and accordingly TCP finalised the deal for the import of some quantity at $317 per ton. 

Meanwhile, another tender for the import of urea was issued by the TCP to complete the procurement of balance quantity of 275,000 tons as the price matching was not allowed by the federal government for this urea import. The second urea import tender was opened on Tuesday (July 30, 2013) and some 15 bidders participated in the tender. Like previous tender its minimum quantity was 75,000 and maximum quantity was 275,000 tons, however not a single bidder’s offer was for complete tender quantity and most of the bidders’ offer was for supply of 100,000 tons of urea. 

Lowest bidder has submitted a bid for the supply of 75,000 tons of urea at $309.90 per ton, which is some $7 less than the previous awarded tender. With acceptance of this lowest bid, overall procurement has reached some 150,000 tons through two urea import tenders against the targeted quantity of 300,000 tons. As the price matching is not allowed for urea import, TCP is releasing third international gallop tender for the import of balance quantity of 150,000 tons. The third urea import tender will be opened on August 6, 2013. 

Sources said presently urea prices in the world market are fluctuating and fell by some $100 per ton during the last six months, therefore foreign suppliers/bidders are submitting bids for a minimum quantity and avoiding offering large quantity. They said the delayed arrival may put a negative impact on the domestic market, which will see a massive urea demand in next two months as new crop season is about to commence. Although, TCP is issuing multiple tenders, but it is also taking advantage of declining urea prices. TCP has finalised second contract of some $7 per ton less than the first tender as the world urea prices are gradually declining, they added. 

Copyright Business Recorder, 2013

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